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Queensland Economic Advocacy Solutions

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Queensland apprentice numbers yet to rebound

Latest statistics from the National Centre for Vocational Education Research (NCVER) reveal that Queensland’s recent labour market improvement is yet to translate into a lift in apprentice and trainee numbers.

The official data shows just 57,100 apprentices and trainees in training in 2017 a number so low that it is comparable to in-training numbers last century.  At the same time commencements (38,100) are less than half of those in 2012.  Both in-training and commencement numbers have been in free fall over the past five years.  Pleasingly commencements have shown signs of an improvement with a slight increase in 2017 but overall numbers are yet to demonstrate a concrete trend on a quarterly basis and in any case remain at alarming levels. 

Contributing reasons for the unprecedented decline in apprentice and trainee numbers include a cessation of Commonwealth employer incentive payments (for commencement and completion) and dramatic increases in first and second year apprentice rates set by the Fair Work Commission.  Paradoxically Unions are currently campaigning to increase apprentice wages under an incorrect assumption that  it is a supply side problem that underpins the decline in numbers (which it is not, it is a demand problem by employers).

Business capacity to invest in apprentices is particularly vulnerable to economic cycles and the past five years have proven difficult ones in the Sunshine State.  However given Queensland’s economy and number of persons employed has been on the rise across 2017 we would reasonably anticipate that the number of apprentices and trainees to also rise, yet they haven’t. This is of significant concern as Queensland’s apprenticeship and trainee numbers underpin future business and economic prosperity. 

Responsibility for the formation, and development of skills is one shared by both government and the private sector.  This requires Government and industry to work together to deliver a workforce that meets the needs of our economy. Queensland employers perform an important service by taking on an individual in a training capacity, and it is essential that they continue to do so – this on the job training is crucial to the future requirements of our economy. At the same time the Queensland Government must drive skills development and greater participation in education and training and there are range of policy levers available to reverse this trend if given the commitment.

There are some very good initiatives currently being delivered by the State Government to promote apprentice and trainee uptake that are no doubt accounting for the recent uptick in commencements.  These include:

  • Employers who hire apprentices and trainees receive a payroll tax rebate of 50 per cent on their wages in addition to their wages being exempt from payroll tax.
  • Employers are eligible for $20,000 Youth Boost for hiring a young jobseeker aged 15-24 years.
  • 15 per cent of labour hours on government projects must be performed by apprentices and trainees.

However if the State Government is truly serious about increasing commencements, lifting youth employment and creating more jobs for Queenslanders it should be doing everything it can to encourage employers to take on apprentices and train the workers of the future. To my mind there are several further initiatives that could be implemented in order to leave no stone unturned and these include:

  • The 50% payroll tax rebate is only until the 30 June 2018 and should be a permanent initiative.
  • An apprentice pledge should be introduced that provides dollar incentives to employers (between $5,000 and $10,000) to take on an apprentice and also discounts on Workcover Premiums.
  • Introducing adult apprentice wage subsidies.

Furthermore these initiatives should be extended to group training companies who are a major employer of apprentices and trainees.  The fact that they are ineligible is a curious aberration to good policy in this area.

The above measures would go part way de-risking employers to take the leap of faith of bringing into their business an inexperienced trainee or apprentice.  At the end of the day unless we fully 100% offset the cost of hiring an apprentice and trainee ultimately it comes down to ‘is there enough money coming into the business to pay for their employment'.  It is often under appreciated the opportunity cost of time spent training new and inexperienced employees.  However the above  initiatives would represent a sizeable offset to employers. that would surely lead to a boon in numbers.

Furthermore we need to have a conversation about restoring employer faith in the VET system in order for them to take on board an apprentice or trainee. Students need a qualification that is actually valued by and relevant to their prospective employer and this is not necessarily the case at present.  In addition Queensland needs to continually evolve its participant administration (red tape) in this area to make it technologically easier for small businesses in particular to hire and document training.

Finally employers should also be encouraged through a public campaign to take on an apprentice or trainee as it is essentially training the workers of the future, investing in their own business’s future and ensuring our economy in coming years has the skills necessary to grow without constraint.

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